Govt may revisit all preferential, free trade agreements

Dawn, Pakistan

Govt may revisit all preferential, free trade agreements

By Parvaiz Ishfaq Rana

5 March 2014

KARACHI: The government is revisiting all the FTAs and PTAs as there is a growing realisation among policymakers that they had been poorly negotiated and were now causing injury to the domestic industry, official sources said on Tuesday.

Sources in the Ministry of Commerce and Textile Industry in Islamabad told Dawn that there was a possibility that the government may even go for total scrapping of all these trade agreements because there was a strong lobby which believes that since Pakistan’s economy is not diversified, these agreements are no solution.

However, in case the government opts for renegotiation of all the free trade agreements and preferential trade agreements, sources said, proper working will be made.

Pakistan so far has signed four FTAs under South Asia Free Trade Agreement with China, Sri Lanka, Malaysia and India. Besides, there are three PTAs with Iran, Mauritius and Indonesia, they added.

Undoubtedly, after the signing of these FTAs and PTAs, sources said, bilateral trade volume with these countries increased substantially, but mostly moved into negative as the balance of trade went in their favour.

It is not only that these trade agreements are causing injury to domestic industry, they are also making some of country’s imports costlier due to monopolistic tendencies created by these FTAs and PTAs against cheaper sources of supplies from other countries of the world market.

According to official figures, at the time of signing of Safta with India in 2004, volume of bilateral trade was only $375.88 million. However, in subsequent years, it rose to $2.606bn with $2.1bn imports from India and $0.5bn exports from Pakistan to India.

Similarly, when FTA was signed with China in 2007, bilateral trade was at $4.109bn which subsequently increased to $12.417bn with balance of trade at $9.275bn going in favour of China.

The bilateral trade with Malaysia stood at $1.637bn and after signing of FTA in 2008, it rose to $1.985bn with $1.560bn balance of trade going in their favour.

Shakil Ahmed Dingrah, former vice president, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said undoubtedly regional trades around the world are increasing, but it was equally important that minimum safeguards should be given to domestic industry.

The European Union (EU) member states are presently doing around 50pc of their trade within the bloc and against this, the Saarc member countries are only having 5pc trade within the region, he added.

He, however, said FTAs and PTAs signed by Pakistan are not properly negotiated and situation is becoming more and more difficult for domestic industry with each passing year because customs duties are being reduced and this was making our products uncompetitive.

Mr Dingrah said that even items included in these trade agreements were not properly selected and if the government plans to renegotiate FTAs and PTAs, it should sit with stakeholders and take their input before finalising these agreements.

All these trade agreements, he said, have a clause which allow renegotiation in case of injury being caused to domestic industry and Pakistan can revisit all the FTAs and PTAs to safeguard its domestic industry.

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